Supermarkets, farm household income and poverty: insights from Kenya

Expansion of supermarkets in developing countries is increasingly providing opportunities for farmers to participate in modern supply chains. This paper argues that supermarket expansion is likely to have substantial welfare effects if more farmers are supported to overcome inherent entry barriers. The paper relies on data from a survey of vegetable growers in Kenya.

The document finds that:

• better educated and middle-aged farmers are more likely to participate in supermarket channels
• land and off-farm employment which are indications of wealth status also increase the chances for participation in supermarket channels by farmers
• supermarkets also favour farmers with better access to infrastructure and those with own means of transport 
• policies supporting off-farm enterprises are likely to yield greater returns for spot market suppliers, which would lead to further improvements in household income
• poorer farmers benefit over-proportionally from supplying supermarkets, yet it is this category of farmers who face the threat of exclusion from modern supply chains
  

The authors underscores that supporting effects can particularly be stronger given the overall importance of horticultural production in the Kenyan economy and the likely spread of supermarkets to regional cities of the country.

The document concludes that supporting efforts enhance farmer participation in supermarket channels and thus reduce poverty among farming households. However, proper targeting of such institutional support is necessary to ensure wider benefit by poorer households.